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Exhibit 10-K
1/1/96
DANA CORPORATION SUPPLEMENTAL BENEFITS PLAN
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ARTICLE I
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DEFINITIONS
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1.1. "Benefit Payment Period" means the one of the following that
applies to the particular Employee or Recipient:
(a) For an Employee or Recipient who is receiving payments
for the remainder of a term certain period, Benefit
Payment Period means the remainder of such term certain
period.
(b) For an Employee or Recipient who is receiving payments
for his or her remaining lifetime, the Benefit Payment
Period is the Life Expectancy of the Employee or
Recipient.
(c) For an Employee or Recipient who is receiving payments
for his or her remaining lifetime plus payments for the
lifetime of a Contingent Annuitant, the Benefit Payment
Period is the Life Expectancy of the Employee or
Recipient plus an additional period to reflect the Life
Expectancy of the Contingent Annuitant after the death
of the Employee or Recipient.
1.2. "Board" means the Board of Directors of the Company.
1.3. "Change in Control" means a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934 as in
effect from time to time; provided that, without limitation, such a change in
control shall be deemed to have occurred if and when (a) any "person" (as such
term is used in Sections 13(d) and
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14(d)(2) of the Securities Exchange Act of 1934) is or becomes a beneficial
owner, directly or indirectly, of securities of the Company representing twenty
percent (20%) or more of the combined voting power of the Company's then
outstanding securities or (b) during any period of 24 consecutive months,
commencing before or after the effective date of this Plan, individuals who at
the beginning of such twenty-four month period were directors of the Company
cease for any reason to constitute at least a majority of the Board of Directors
of the Company. Notwithstanding anything to the contrary in this Plan, the term
"person" referred to in clause (a) above of this Section 1.3 shall not include
within its meaning, and shall not be deemed to include, for any purpose of this
Plan, any employee benefit plan (or related trust) sponsored or maintained by
the Company or any corporation controlled by the Company.
1.4. "Code" means the Internal Revenue Code of 1986, as amended,
or as it may be amended from time to time.
1.5. "Company" means Dana Corporation, a corporation organized
under the laws of the Commonwealth of Virginia.
1.6. "Contingent Annuitant" means the person designated to
receive retirement benefits under this Plan following the death of the
Employee or a Recipient.
1.7. "Credited Service" means "Credited Service" as that term is
defined in the Retiremen IncomePlan.
1.8. "Effective Date" means September 1, 1988.
1.9. "Employee" means an individual who is a participant
(including a retired participant) in a funded, defined benefit pension plan
maintained by the Company, or any successor plan that may be adopted or
substituted for such plan if, and only if, (a) the individual is actually
employed by the Company on September 1, 1988, and (b) the individual is a
U.S.-based member of the long-term awards group as of September 1, 1988, under
the Dana Corporation Additional Compensation Plan.
1.10. "Excess Plan" means the Dana Corporation Excess Benefits Plan,
as amended from time to time.
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1.11. "Highest Average Monthly Earnings" means the sum of
(a) the Employee's basic salary (before any reduction as a
result of an election to have his pay reduced in
accordance with a "cafeteria plan" or a "cash or
deferred arrangement" pursuant to Section 125 or
Section 401(k) of the Code), and
(b) bonuses and incentive payments paid (or that would have
been paid, but for a deferral arrangement) to the
Employee (provided, however, that with respect to 1994
and subsequent years' bonus awards under the Company's
Additional Compensation Plan, only that portion of the
Employee's bonus award as does not exceed 125% of his
base salary will be considered)
during any 3 calendar years out of the last 10 calendar years of active
employment with the Company prior to retirement in which such sum was
the highest, divided by 36.
1.12. "Life Expectancy" means the expected remaining lifetime based
on the Mortality Table and the age at the nearest birthday of the Employee or
Recipient at the date the Lump Sum Payment is made. If a joint and contingent
survivor annuity has been elected, then Life Expectancy shall reflect the joint
Life Expectancies of the Employee or Recipient and Contingent Annuitant.
1.13. "Lump Sum Payment" shall be determined as set forth in
paragraph (c) of Section 4.7 of the Plan.
1.14. "Mortality Table" shall mean the Unisex Pension 1984 Mortality
Table set forward one year in age (or such other pensioner annuity mortality
table as the Company with the written consent of the Employee or Recipient shall
determine) and the associated Uniform Seniority Table for the determination of
joint life expectancies.
1.15. "Net Specified Rate" shall mean the interest rate which will
produce income on a tax free basis that equals the income produced by the
Specified Rate net of the combined highest rates of Federal, state and local
income taxes that are in effect in the jurisdiction of the Employee or Recipient
on the date of payment of the Lump Sum Payment.
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1.16. "Pension Plan" means the funded, defined benefit pension plan
in which an Employee was participating at the time of his termination of
employment (or retirement) from the Company.
1.17. "Plan" means the "Dana Corporation Supplemental Benefits
Plan", as set forth herein.
1.18. "Plan Administrator" means the Plan Administrator appointed
under the Pension Plan.
1.19. "Primary Social Security Benefit" means "Primary Social
Security Benefit" as that term is defined by the Retirement Income Plan.
1.20. "Retirement Income Plan" means The Dana Corporation Retirement
Income Plan, as in effect on June 30, 1988.
1.21. "Specified Rate" means an interest rate equal to 85% of a
composite insurance company annuity rate provided by an actuary designated by
the Plan Administrator (and provided by such actuary as of the last month of the
calendar year next preceding the calendar year in which the distribution is
made), subject to the condition that the interest rate in effect for any such
year may not differ from the rate in effect for the prior year by more than
one-half of one percent, and also subject to the condition that any such rate
shall be rounded to the nearest one-tenth of one percent (and if such rate is
equidistant between the next highest and next lowest one-tenth of one percent,
rounded to the next lowest one-tenth of one percent).
1.22. "Temporary Retirement Benefit" means the benefit described in
Section 4.1(b)(i)(B) hereof.
1.23. "Vesting Service" means "Vesting Service" as that term is
defined by the Retirement Income Plan.
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ARTICLE II
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PURPOSE OF THE PLAN
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2.1. PURPOSE. This Plan is adopted effective September 1, 1988, and
amended effective January 1, 1996, and is intended to provide supplemental
benefits to Employees and their beneficiaries in addition to any benefits to
which such Employees and beneficiaries may be entitled under other
Company-sponsored, funded, defined benefit pension plans and the Excess Plan.
ARTICLE III
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ELIGIBILITY
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3.1. ELIGIBILITY. All Employees and beneficiaries of Employees eligible
to receive retirement benefits from a Pension Plan shall be eligible to receive
benefits under this Plan in accordance with Article IV, regardless of when the
Employee may have terminated employment or retired (except as otherwise
specified by Article IV).
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ARTICLE IV
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BENEFITS
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4.1. Basic Benefits.
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(a) An Employee who, on or after September 1, 1988, retires
from active employment with the Company on or after his
65th birthday, shall be entitled to receive a lump sum
benefit that is the actuarial equivalent (determined in
accordance with Section 4.2 hereof) of a monthly
supplemental benefit equal to the excess (if any) of:
(i) (A) 1.6 percent of the Employee's
Highest Average Monthly Earnings
multiplied by the number of years and
fractional parts thereof of his Credited
Service at the time of retirement, less
(B) 2 percent of the Employee's Primary
Social Security Benefit multiplied by
the number of years and fractional parts
thereof of his Credited Service but not
more than 50 percent of the Employee's
Primary Social Security Benefit, over
(ii) the sum of the monthly benefits he is entitled
to receive from all Company-sponsored, funded,
defined benefit pension plans, and the Excess
Plan, determined in each case on the basis of
the assumption that the Employee's benefits
under such plans are paid in the form of a
single life annuity for the life of the
Employee, commencing as of the Employee's date
of retirement under the Pension Plan.
(b) An Employee who, on or after September 1, 1988, retires
from employment with the Company on or after his 50th
birthday, after completing 10 years of Vesting Service,
after the sum of his age and years of Vesting Service,
both calculated to the nearest month, equal 70 or more,
and before his 65th birthday, shall be entitled to
receive a lump sum benefit that is the actuarial
equivalent
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(determined in accordance with Section 4.2 hereof) of a
monthly supplemental benefit equal to the excess (if
any) of
(i) (A) the retirement benefit described in
Section 4.01(a)(i) hereof, plus
(B) a Temporary
Retirement Benefit equal to the
Employee's Primary Social Security
Benefit, reduced, if applicable, by the
actual amount of any unreduced
Social Security benefit paid to the
Employee, payable through the month in
which the Employee attains age 62,
provided that if the Employee has less
than 25 years of Credited Service, the
Temporary Retirement Benefit shall be
prorated based on the proportion of 25
years of Credited Service that has been
credited to the Employee at the time of
his retirement; and provided further
that
(C) retirement benefits prescribed by
paragraph (A), above, and Temporary
Retirement Benefits prescribed by
paragraph (B), above, shall not exceed
the following limitations:
I. Temporary Retirement Benefits payable to
all Employees, and retirement benefits
payable to all Employees who
participated in the Retirement Income
Plan as of December 31, 1983, and who
had attained age 45 as of that date,
shall not exceed the percentage of such
benefits prescribed by the following
schedule, based on the Employee's age on
the date of retirement:
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Age Percentage
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64 100%
63 100%
62 100%
61 95%
60 90%
59 85%
58 80%
57 75%
56 70%
55 65%
54 60%
53 55%
52 50%
51 45%
50 40%
II. Retirement benefits payable to all Employees
who did not participate in the Retirement Income
Plan on December 31, 1983, or who had not
attained age 45 as of that date, shall not
exceed the percentage of such benefits
prescribed by the following schedule, based on
the Employee's age on the date of retirement:
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Age Percentage
--- ----------
65 100%
64 95%
63 90%
62 85%
61 80%
60 75%
59 70%
58 65%
57 60%
56 55%
55 50%
54 45%
53 40%
52 35%
51 30%
50 25%
over
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(ii) the sum of the monthly benefits he
is entitled to receive from all
Company-sponsored, funded, defined benefit
pension plans and the Excess Plan, determined in
each case on the basis of the assumption that
the Employee's benefits under such plans are
paid in the form of a single life annuity for
the life of the Employee, commencing as of the
Employee's date of retirement under the Pension
Plan.
(c) Subject to the provisions of Section 4.2 hereof, the
benefit payable pursuant to paragraph (a) or (b) of
this Section 4.1, shall be paid in the form of a lump
sum, payable as of the Employee's date of retirement
under the Pension Plan.
(d) If an Employee dies before the date as of which
benefits are scheduled to be paid or to commence
hereunder, the Employee's surviving spouse (if
any) shall be entitled to receive a lump sum
benefit equal to 100 percent of the benefit to
which the Employee would have been entitled
under paragraph (c), above, if the Employee had
retired on the date of his death.
(e) No benefits shall be paid hereunder with respect to an
active Employee who is not married on the date of his
death.
4.2. FORM OF BENEFIT PAYMENTS. An Employee eligible for a benefit under
this Plan shall be entitled to receive his benefit in the form of an immediate
lump sum payment. However, upon the written request of the Employee, the
Treasurer of the Company may, in his sole discretion, permit such benefit to be
paid instead, concurrently with any benefit that the Employee is entitled to
receive under the Excess Plan, pursuant to an optional form of payment that is
used for the payment of the Employee's retirement benefit under the Pension
Plan. Any such written request must be filed by the Employee with the Treasurer
of the Company on or before the Employee's date of retirement under the Pension
Plan. If the Employee is the Treasurer of the Company, the duties of the
Treasurer of the Company under this Section 4.2 shall be discharged by the
President of the Company. The amount of the benefit payable pursuant to any form
of payment under this Plan shall be determined by applying the mortality
assumptions, interest rates, and other factors contained in the Retirement
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Income Plan that would be applicable to the form of payment payable
under this lan; provided that if a lump sum distribution is made hereunder, the
amount of the lump sum distribution shall be equal to the excess of the amount
determined under paragraph (a), below, over the amount determined under
paragraph (b), below.
(a) The total lump sum amount that is actuarially
equivalent to the monthly supplemental benefit
prescribed by Section 4.1(a)(i) or Section 4.1(b)(i),
whichever is applicable, calculated using the basis
described in subparagraph (i) or (ii), below, whichever
produces the larger lump sum amount:
(i) the lump sum amount calculated on
the basis of the "applicable interest rate" (as
in effect for the November preceding the
calendar year in which the calculation is made)
and the "applicable mortality table", both as
defined in Section 417(e) of the Code; or
(ii) the lump sum amount calculated on
the basis of an interest rate equal to 85% of a
composite insurance company annuity rate
provided by an actuary designated by the Plan
Administrator (and provided by such actuary as
of the December next preceding the calendar year
in which the distribution is made), subject to
the condition that the interest rate in effect
for any such year may not differ from the rate
in effect for the prior year by more than
one-half of one percent, and also subject to the
condition that any such rate shall be rounded to
the nearest one-tenth of one percent (and if
such rate is equidistant between the next
highest and next lowest one-tenth of one
percent, rounded to the next lowest one-tenth of
one percent), and on the basis of the applicable
mortality assumption for males under the 1971
Group Annuity Mortality Table.
(b) The total lump sum distribution that he is
entitled to receive under all Company-sponsored,
funded, defined benefit pension plans and the Excess
Plan, determined on the basis of the
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interesdt rate and mortality assumptions required by
the terms of those plans.
Any post-retirement increase in the benefits being paid to an Employee
under the Pension Plan shall also be applied on a comparable basis to any
monthly supplemental benefits under this Plan.
4.3. TIME AND DURATION OF BENEFIT PAYMENTS. Benefits due under the Plan
shall be paid coincident with the payment date of benefits under the Pension
Plan, or at such other time or times as the Plan Administrator in his discretion
determines. All supplemental benefits payable under this Plan shall cease as of
the first day of the month following the Employee's death, except that payments
may continue to the Employee's spouse or beneficiary following his death
pursuant to an optional form of payment selected under Section 4.2.
4.4 BENEFITS UNFUNDED. The benefits payable under the Plan shall be
paid by the Company each year out of its general assets and shall not be funded
in any manner. The obligations that the Company incurs under this Plan shall be
subject to the claims of the Company's other creditors having priority as to the
Company's assets.
4.5 NO RIGHT TO TRANSFER INTEREST. The Plan Administrator may recognize
the right of an alternate payee named in a domestic relations order to receive
all or a portion of an Employee's benefit under this Plan, provided that (i) the
domestic relations order would be a "qualified domestic relations order" within
the meaning of Section 414(p) of the Code if Section 414(p) were applicable to
the Plan; (ii) the domestic relations order does not purport to give the
alternate payee any right to assets of the Company or its affiliates; and (iii)
the domestic relations order does not purport to give the alternate payee any
right to receive payments under the Plan before the Employee is eligible to
receive such payments. If the domestic relations order purports to give the
alternate payee a share of a benefit to which the Employee currently has a
contingent or nonvested right, the alternate payee shall not be entitled to
receive any payment from the Plan with respect to the benefit unless the
Employee's right to the benefit becomes nonforfeitable. Except as set forth in
the preceding two sentences with respect to domestic relations orders, and
except as required under applicable federal, state, or local laws concerning the
withholding of tax, rights to benefits payable under the Plan are not subject in
any manner to anticipation,
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alienation, sale, transfer, assignment, pledge, attachment or other legal
process, or encumbrance of any kind. Any attempt to alienate, sell, transfer,
assign, pledge, or otherwise encumber any such supplemental benefit, whether
currently or thereafter payable, shall be void.
4.6 SUCCESSORS TO THE CORPORATION. This Plan shall be binding upon and
inure to the benefit of any successor or assign of the Company, including,
without limitation, any corporation or corporations acquiring directly or
indirectly all or substantially all of the assets of the Company whether by
merger, consolidation, sale or otherwise (and such successor or assign shall
thereafter be deemed embraced within the term "Company" for the purposes of this
Plan).
4.7. CHANGE IN CONTROL. Anything hereinabove in this Article
IV or elsewhere in this Plan to the contrary notwithstanding:
(a) LUMP SUM PAYMENT. Upon the occurrence of a
Change in Control, each Employee and each
Employee's spouse or beneficiary following his
death who are receiving benefits under the Plan
("Recipient") shall receive, on account of
future payments of any and all benefits due
under the Plan, a Lump Sum Payment, so that each
such Employee or Recipient will receive
substantially the same amount of after-tax
income as before the Change in Control, determined
as set forth in paragraph (c) of this Section 4.7.
(b) CERTAIN MATTERS FOLLOWING A LUMP SUM PAYMENT.
An Employee who has received a Lump Sum Payment
pursuant to paragraph (a) of this Section 4.7
shall, thereafter (i) while in the employ of the
Company, continue to accrue benefits under the
Plan, and (ii) be eligible to be paid further
benefits under the Plan, after appropriate
reduction in respect of the Lump Sum Payment
previously received. For purposes of
calculating such reduction, the Lump Sum Payment
shall be accumulated with interest at the
Specified Rate in effect from time to time for
the period of time from initial payment date to
the next date on which a computation is to be
made (i.e., upon Change in Control, retirement,
or other termination of employment). It shall
then be converted to a straight-life annuity
using the current
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current annuity certain factor. The current annuity
certain factor will be determined on the Net Specified
Rate basis if this benefit payment is being made
due to a subsequent Change in Control; otherwise,
the Specified Rate shall be used.
(c) DETERMINATION OF LUMP SUM PAYMENT. The Lump Sum
Payment referred to in paragraph (a) of this
Section 4.7 shall be determined by multiplying
the annuity certain factor (for monthly payments
at the beginning of each month) based on the
Benefit Payment Period and the Net Specified
Rate by the monthly benefit (adjusted for
assumed future benefit adjustments due to Social
Security and Code Section 415 changes in the
Pension Plan) to be paid to the Employee or
Recipient under the Plan.
4.8. TAXATION. Notwithstanding anything in the Plan to the contrary, if
the Internal Revenue Service determines that the Participant is subject to
Federal income taxation on an amount in respect of any benefit provided by the
Plan before the distribution of such amount to him, the Company shall forthwith
pay to the Participant all (or the balance) of such amount as is includible in
the Participant's Federal gross income and shall correspondingly reduce future
payments, if any, of the benefit.
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ARTICLE V
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AMENDMENT, TERMINATION AND INTERPRETATION
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5.1. AMENDMENT AND TERMINATION. The Company reserves the right, by
action of the Board, to amend, modify or terminate, either retroactively or
prospectively, any or all of the provisions of this Plan without the consent of
any Employee or beneficiary; provided, however, that no such action on its part
shall adversely affect the rights of an Employee and his beneficiaries without
the consent of such Employee (or his beneficiaries, if the Employee is deceased)
with respect to any benefits accrued prior to the date of such amendment,
modification, or termination of the Plan if the Employee has at that time a
non-forfeitable right to benefits under a funded, defined benefit pension plan
sponsored by the Company.
5.2. INTERPRETATION. The Plan Administrator shall have the power to
interpret the Plan and to decide any and all matters arising hereunder;
including but not limited to the right to remedy possible ambiguities,
inconsistencies or omissions by general rule or particular decision; provided,
that all such interpretations and decisions shall be applied in a uniform and
nondiscriminatory manner to all Employees similarly situated. In addition, any
interpretations and decisions made by the Plan Administrator shall be final,
conclusive and binding upon the persons who have or who claim to have any
interest in or under the Plan.
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DANA CORPORATION SUPPLEMENTAL BENEFITS PLAN
APPENDIX A
A.1 PURPOSE. The purpose of this Appendix A is to provide supplemental
benefits to certain individuals who are not otherwise eligible for benefits
under the Plan. Except to the extent that a contrary rule is expressly set forth
below, capitalized terms used in Appendix A shall have the meaning set forth in
Article I of the Plan, and the benefits provided under Appendix A shall be
subject to the administrative provisions set forth in Sections 4.2 through 4.8
of Article IV and Sections 5.1 and 5.2 of Article V (construed as if the term
"Employee" in those sections referred to an individual who is eligible for a
benefit under this Appendix A).
A.2 ELIGIBILITY. An individual is eligible for a supplemental
retirement benefit under this Appendix A if the individual meets all of the
following criteria on the date of his retirement from the Company and its
affiliates (or if he meets the criteria in paragraphs (a) through (c) on the
date of a Change in Control, if earlier):
(a) The individual is not eligible for a supplemental
retirement benefit under any provision of the Plan other
than this Appendix A.
(b) The individual has reached his 50th birthday and has completed
at least 10 years of Vesting Service; and the sum of the
individual's age and years of Vesting Service, both calculated
to the nearest month, equals 70 or more.
(c) The individual is a U.S.-based member of the "A" Group or the
"B" Group, as defined by the Compensation Committee of the
Board, and is a management employee or a highly-compensated
employee.
(d) The individual retires on or after January 1, 1996 and
before January 1, 2010.
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A.3 AMOUNT OF BENEFIT. The amount of an individual's supplemental
retirement benefit under Appendix A shall be the initial benefit determined
under paragraph (a), multiplied by the percentage specified in paragraph (b),
and reduced as provided in paragraph (c).
(a) The individual's initial benefit shall be the normal
retirement benefit or early retirement benefit that the
individual would have received under the Retirement
Income Plan if the provisions of that Plan had remained
in effect through the individual's retirement date, with
the modification described in the following sentence.
For purposes of applying the Retirement Income Plan
formula, the individual's "Final Monthly Earnings" shall
be the average of his Earnings during the five
consecutive calendar years out of the last ten years of
his active employment with the Company in which the
average was the highest.
(b) The percentage applied to the individual's initial benefit
shall be determined according to the calendar year in which
the individual retires, as follows:
Year in Which Individual Retires Applicable Percentage
-------------------------------- ---------------------
1996 - 1999 90%
2000 - 2004 80%
2005 - 2009 70%
After 2009 0%
(c) The benefit determined under this Section A.3 shall be
calculated as a single-life annuity, and shall be
reduced by the sum of the monthly benefits that the
individual is entitled to receive from any source listed
in subparagraph (i), (ii), or (iii), below, determined
in each case on the basis of the assumption that the
individual's benefits under such sources are paid in the
form of a single-life annuity for the life of the
individual, commencing as of the individual's date of
retirement under the Pension Plan:
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(i) all funded defined benefit pension plans
sponsored by the Company and its affiliates; and
(ii) all unfunded, nonqualified deferred compensation plans
sponsored by the Company and its affiliates (including,
but not limited to, the Excess Plan), with the sole
exception of the Dana Corporation Additional
Compensation Plan; and
(iii) any supplemental retirement benefit provided under an
employment contract, or under any other contract or
agreement, between the individual and the Company or
any affiliate.
A.4 Form of Payment.
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(a) An individual shall be entitled to receive his
benefit under this Appendix A in the manner
provided in Section 4.2 of the Plan. If the
individual elects to receive a lump sum payment,
however, the lump sum payment shall be
calculated as provided in paragraph (b), below,
rather than as provided in Section 4.2 of the
Plan.
(b) The single-life annuity determined under
paragraphs (a) and (b) of Section A.3 shall be
converted to a lump sum present value on the
basis of the "applicable interest rate" (as in
effect for the November preceding the calendar
year in which the calculation is made) and the
"applicable mortality table", both as defined in
Section 417(e) of the Code. The lump sum
determined under the preceding sentence of this
Section A.4 shall be reduced by the lump sum
present value of all benefits that the
individual is entitled to receive from all
sources described in paragraph (c) of Section
A.3, determined in each case on the basis of the
interest rate and mortality assumptions required
for lump sum calculations by the terms of those
plans or agreements (or, if no such interest
rates or mortality assumptions are specified in
the plan or agreement, on the basis of the
interest rate and mortality assumptions set
forth in the first sentence of this paragraph
(b)).
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A.5 NO PRE-RETIREMENT DEATH BENEFIT. If an individual dies before his
benefit under this Appendix A commences or is paid, no benefit shall be paid to
the individual's surviving spouse or other beneficiary.